STATEMENT OF ACCOUNTING POLICIES

Transcription

1 STATEMENT OF ACCOUNTING POLICIES Reporting entity The prospective financial statements of the Waitaki District Council are for the years ended 30 June 2016 and for the subsequent ten years, ending 30 June We are a territorial local authority governed by the provisions of the Local Government Act These prospective financial statements are for Council itself consolidated group accounts have not been provided. Our consolidated group consists of the Waitaki District Council and its subsidiaries: Whitestone Contracting Limited (100% owned), Waitaki District Health Services Limited (100% owned) and Tourism Waitaki (100% owned). The investment in Omarama Airfield Limited (50% owned) is treated as a joint venture. All companies are incorporated in New Zealand. Our primary objective is to provide goods or services for community and social benefit rather than making a financial return. Accordingly, these prospective financial statements comply with Public Benefit Entity (PBE) reporting standards, and have been prepared in accordance with Tier 1 PBE standards. Basis of preparation The financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP) and the requirements of the Local Government Act These statements are produced under Section 98, Part 6, and Part 3 of Schedule 10 of the Act. They comply with PBE IPSAS, and other applicable financial reporting standards as appropriate for public benefit entities. The accounting policies, set out below, have been applied consistently to all periods presented in these prospective financial statements. The prospective financial statements have been prepared on an historical cost basis, modified by the revaluation of certain property, plant and equipment: land and buildings, infrastructural and biological assets. The prospective financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars ($000). The functional currency of Council and the group is New Zealand dollars. The prospective financial statements comply with PBE FRS-42 (prospective financial statements). Specific accounting policies The following specific accounting policies that significantly affect the measurement of operating results, cash flows and financial position have been applied: Income recognition Revenue is measured at the fair value of consideration received or receivable. Rates are recognised when set. Water billing revenue is recognised when earned. Government grants and subsidies are recognised when eligibility has been established. Operating revenues represent the gross revenue from commercial operations in the ordinary course of business and are recognised when earned LONG TERM PLAN

2 Fees and charges are recognised when invoiced. Rebates are recognised when received. Interest income is recognised when earned. Dividends are recognised when received. Vested infrastructural assets are recognised when we accept their transfer from the subdivider. The value recognised is based on certified engineers certificates. Development and financial contributions are recognised at the later of invoicing or the event that will give rise to a requirement for a development or financial contribution under the relevant legislation. Sales of goods are recognised when a product is sold to the customer. Sales are usually in cash or by credit card. The recorded revenue is the gross amount of the sale. Revenue from non-exchange transactions We derive revenue from non-exchange transactions, where monies are received by us in relation to services which may not be provided specifically to the payer, for which services may not be provided for some time, or for which the service provided may not reflect a value equivalent to the revenue earned. Examples of non-exchange revenue include: Rates, which fund services that may not be accessed equally, or at all, by all ratepayers, or which may not be expended in the year in which they are received Development Contributions which are held for future infrastructure requirements Infringements and fines which are charged by us but for which no service is provided Revenue from exchange transactions We also derive revenue from exchange transactions, where a measurable service is provided by us in exchange for the revenue earned by us. Examples of such transactions include: User charges for use of the Waitaki Aquatic Centre, landfill and similar charges Regulatory charges for building consents, liquor licences, dog registration and similar charges Interest received in relation to funds deposited, invested or lent externally While all revenues are recognised in accordance with the principles outlined above, we have policies which require certain revenues arising from non-exchange transactions to be held in special reserves until the funds are required. Borrowing costs We have elected to defer the application of PBE IPSAS 5 Borrowing Costs. Borrowing costs are recognised as an expense in the period in which they are incurred, and are not capitalised. Leases Finance leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. The leased assets and corresponding liabilities are recognised and the leased assets are depreciated over the period benefit is expected from their use LONG TERM PLAN 113

3 Operating leases Operating leases are leases that do not transfer substantially all the risks and rewards incidental to ownership of an asset. These are charged on a straight-line basis over the term of the lease. Trade and other receivables Receivables from non-exchange transactions and receivables from exchange transactions are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate method, less any provision for impairment. Goods and Services Tax (GST) These prospective financial statements have been prepared on a GST exclusive basis. Any net GST due or owing at balance date is included in trade and other payables or receivables from non-exchange transactions or receivables from exchange transactions (as appropriate). Receivables from non-exchange transactions, receivables from exchange transactions and trade and other payables are stated inclusive of GST. Where GST is not recoverable as an input tax, it is recognised as part of the related asset or expense. Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits held at call and other shortterm highly liquid investments with original maturities of three months or less, and bank overdrafts. The carrying value of cash at bank and term deposits with maturities less than three months approximate fair value. Inventories Inventories, comprising materials on hand, are stated at the lower of cost and net realisable value. Cost is determined on a first-in first-out basis. Any write down from cost to net realisable value is recognised immediately in the surplus or deficit. Financial assets We classify our financial assets in four categories: financial assets at fair value through surplus or deficit, held to maturity investments, loans and receivables and available for sale. The classification depends on the purpose for acquiring the investments. Management determines the classification of investments at initial recognition and reevaluates this designation at every reporting date. Financial assets are initially measured at fair value plus transaction costs unless they are carried at fair value through surplus or deficit, in which case the transaction costs are recognised in the surplus or deficit. Purchases and sales of financial assets are recognised on the trade-date, which is the date on which we commit to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and we have transferred substantially all the risks and rewards of ownership. The fair value of financial instruments traded in active markets is based on quoted market prices at balance sheet date. The quoted market price used is the current bid price. The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. We use a variety of methods and make assumptions based on market conditions existing at each balance date. Techniques, LONG TERM PLAN

4 such as discounted expected cash flows, are used to determine fair value for the remaining financial instruments. Of the four categories of financial assets, only two are relevant to us. Loans and receivables These are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition they are measured at amortised cost using the effective interest method. Gains and losses when the asset is impaired or derecognised are recognised in the surplus or deficit. Loans and receivables are classified as receivables from non-exchange transactions, receivables from exchange transactions or other financial assets as appropriate in the balance sheet. Available for sale financial assets These financial assets are either designated as available-for-sale or cannot be classified in the other categories above. This category encompasses: investments that we intend to hold long-term but which may be realised before maturity; and shareholdings that we hold for strategic purposes. After initial recognition these investments are measured at their fair value. Gains and losses are recognised in other comprehensive income except for impairment losses, which are recognised in the surplus or deficit. In the event of impairment, any cumulative losses previously recognised in other comprehensive income will be reclassified from equity and recognised in the surplus or deficit even though the asset has not been de-recognised. On de-recognition, the cumulative gain or loss previously recognised in other comprehensive income is recognised in the surplus or deficit. Impairment of financial assets At each balance date we assess whether there is any objective evidence that a financial asset or group of financial assets is impaired. Any impairment losses are recognised in surplus or deficit. A provision for impairment of receivables is established when there is objective evidence that we will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted using the effective interest method. Financial liabilities Interest bearing borrowings are classified as other non-derivative financial instruments and are initially recognised at their fair value. After initial recognition, all borrowings are measured at amortised cost using the effective interest rate method. Trade and other payables Trade and other payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method. Investment properties Investment properties are held to earn income or for capital appreciation, do not include LONG TERM PLAN 115

5 properties held for strategic purposes or to provide a social service, and are initially measured at cost including transaction costs unless acquired at less than fair value when they are recognised at fair value. They are not depreciated, and are de-recognised when disposed of or permanently withdrawn from use and no future benefit is expected. Gains or losses on de-recognition are recognised in the surplus or deficit in the year of de-recognition. We currently propose there are no properties that we would classify as investment properties over the life of this Long Term Plan. Non-current assets held for sale Non-current assets held for sale are recognised as a current asset when the sale is highly probable, there is commitment to a plan to sell, and that sale is expected to occur within one year. They are valued at the lower of the carrying value and their fair value less disposal costs. Any impairment losses for write-downs of non-current assets held for sale are recognised in the surplus or deficit. Any increases in fair value (less costs to sell) are recognised up to the level of any impairment losses that have been previously recognised. Non-current assets are not depreciated while they are classified as held for sale. Forestry Forestry is the estimated worth of maturing tree stocks in our forests as at date of valuation. The valuation method adopted is net present value based on the age and condition of the trees. Our forests are revalued annually as at 30 June each year. The costs to maintain the forestry assets are included in the reported surplus or deficit. Our forestry plantations are professionally managed, and we adhere strictly to a replanting plan developed by our advisers to ensure we have no liability under the Emissions Trading Scheme. Property, plant and equipment Property, Plant and Equipment consists of: Operational assets including land, buildings, landfill (post closure), library books, plant and equipment, furniture and fittings, and motor vehicles. Restricted assets including parks and reserves owned by us to provide benefit or service to the community and which cannot be disposed of because of legal or other restrictions. Infrastructure assets the fixed utility systems owned by us. Each class includes all items that are required for the network to function, for example, sewer reticulation includes reticulation piping and sewer pump stations. Property, plant and equipment are shown at cost or valuation, less accumulated depreciation and impairment losses. Additions The cost of an item of property, plant and equipment is recognised as an asset when it is probable that future economic benefits or service potential associated with the item will flow to us and the cost of the item can be measured reliably. In most instances, an item of property, plant and equipment is recognised at its cost. Where an asset is acquired at no cost, or for a nominal cost, it is recognised at fair value as at the date of acquisition LONG TERM PLAN

6 Disposals Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses on disposals are reported net in the surplus or deficit. When revalued assets are sold, the amounts included in asset revaluation reserves in respect of those assets are transferred to retained earnings. Subsequent costs Costs incurred subsequent to initial acquisition are capitalised only when it is probable that future economic benefits or service potential associated with the item will flow to us and the cost of the item can be measured reliably. Revaluations Certain classes of assets, as detailed below, are revalued. Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from fair value. Land and buildings Property holdings are valued every three years the results of the next such revaluation will be recognised in the 2017 financial year. Infrastructural assets Infrastructural assets are utility assets that provide a continuing service to the community. They are recorded at valuation, based on optimised depreciated replacement cost, with subsequent additions recorded at cost until the next revaluation. Valuations are performed every three years. The next revaluation of water infrastructure will be recognised in the 2016 financial year and of roading infrastructure in the 2018 financial year. Vested infrastructural assets are initially recorded at valuation based on engineers certificates. This Long Term Plan does not include the receipt of any vested assets. Infrastructural assets work in progress Capital projects that are incomplete at balance date are regarded as work in progress. The value of work in progress is included in fixed assets, but is not depreciated until it has been commissioned. Movements into work in progress represent the value of work done on incomplete capital projects, while movements out of work in progress represent the final capitalisation of the completed project. Harbour assets Harbour wharves and structures and the Oamaru Harbour breakwater were valued at June This value represents deemed cost, with subsequent additions recorded at cost. These assets are not revalued. Library collection Library collections are carried at depreciated replacement cost. Valuations are performed annually by the Head Librarian and are not subject to independent review because they are based on readily available market prices. Cultural and heritage assets LONG TERM PLAN 117

7 These assets provide a cultural or heritage service to the community, and include North Otago Museum artefacts, the Forrester Gallery art collection and the libraries resources. They are recorded at valuation, based on net current value, with subsequent additions recorded at cost. Accounting for revaluations Results of revaluations of property, plant and equipment are reflected in other comprehensive income and are held in an asset revaluation reserve for that class of asset. Where a revaluation causes a debit balance in the asset revaluation reserve, this balance is not recognised in other comprehensive income but is recognised in the surplus or deficit. Any subsequent increase on revaluation that off-sets a previous decrease in value recognised in the surplus or deficit will be recognised first in the surplus or deficit up to the amount previously expensed, and then in other comprehensive income. Depreciation General Unless otherwise stated, all our fixed assets are depreciated on a straight-line basis at rates that will write-off their cost or valuation, less any estimated realisable value, over their expected useful lives. Land Land is not depreciated. Buildings Buildings are depreciated over their expected lives of 15 to 100 years, dependent on the method of construction. Cultural and heritage assets Other than library resources, cultural and heritage assets are not depreciated. Library resources are depreciated over their expected lives of seven years. Depreciation Depreciation has been calculated on a straight-line basis as follows: Asset Category Infrastructural Assets Roading formation, base course pavement structure surfacing drainage, footpaths bridges, retaining structures streetlights, railings Water schemes head works reservoirs pumps reticulation Depreciation Base not depreciated years 4 17 years years years 4 35 years years years years years LONG TERM PLAN

8 Sewerage schemes reticulation pumps treatment works Stormwater reticulation Transfer stations and landfill developments Alps2Ocean Cycle Trail track formation, base course track surface bridges, retaining structures facilities: signage facilities: livestock proofing (gates, fencing, etc) Harbour Assets Wharves and Breakwater Other Assets Other assets are depreciated over their expected useful lives: Asset Category Motor vehicles Office equipment Office furniture and fittings Intangible assets years years years years 3 25 years not depreciated 10 years years 12 years 35 years years Depreciation Base 3 10 years 2 5 years 2 10 years Intangible assets are identifiable non-monetary assets without physical substance. The main categories of intangible assets are: Software Acquired computer software licenses are capitalised on the basis of costs incurred to acquire and bring into use. Costs associated with maintaining computer software are expensed when incurred. The useful life of software is three to 10 years and the cost is amortised on a straight-line basis. Other intangible assets including: Emissions Trading Scheme carbon credits Carbon credits received under the Emissions Trading Scheme were assessed at their fair value at 30 June 2013, while carbon credits purchased since that time are valued at their cost price. Carbon credits are not amortised, as they represent current expenditure relating to a known future event, and market pricing for these commodities is generally trending upwards. Carbon credits surrendered to meet our obligations relating to assessed landfill emissions are treated as disposals. Other These are other intangible assets with an identifiable useful life of 25 years, which are amortised on a straight-line basis. Impairment of property, plant and equipment, and intangible assets Intangible assets with a finite useful life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets that have a finite useful life are reviewed for indicators of impairment at each balance date. When there is an indication of impairment the asset s recoverable amount LONG TERM PLAN 119

9 is estimated. An impairment loss is recognised for the amount by which the asset s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset s fair value less costs to sell, and value in use. Value in use is depreciated replacement cost for an asset where the future economic benefits or service potential of the asset are not primarily dependent on the asset s ability to generate net cash inflows and where the entity would, if deprived of the asset, replace its remaining future economic benefits or service. For revalued assets the impairment loss is recognised against other comprehensive income and the revaluation reserve for that class of asset. If that would result in a debit balance in the revaluation reserve, the balance is recognised in the surplus or deficit. For assets not carried at a revalued amount, the total impairment loss is recognised in the surplus or deficit. Employee entitlements Short-term benefits Employee benefits that we expect to be settled within 12 months of balance date are measured at nominal values based on accrued entitlements at current rates of pay. These include salaries and wages accrued up to balance date, annual leave earned to, but not yet taken, at balance date, and long service leave entitlements expected to be settled within 12 months. We recognise a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation. Long service leave Entitlements that are payable beyond 12 months, such as long service leave and retiring leave are calculated on an actuarial basis. The calculations are based on: likely future entitlements accruing to staff, based on years of service, years to entitlement, the likelihood that staff will reach the point of entitlement and contractual entitlements information; and the present value of the estimated future cash flows, using an appropriate discount rate and inflation factor. Superannuation schemes Defined contribution schemes Obligations for contributions to defined contribution superannuation schemes are recognised as an expense in the surplus or deficit as incurred. Multi-employer defined benefit schemes We belong to a Defined Benefit Plan Contributors Scheme (the scheme), managed by the Board of Trustees of the National Provident Fund. The scheme is a multi-employer defined benefit scheme. Insufficient information is available to use defined benefit accounting, as it is not possible to determine, from the terms of the scheme, the extent to which the surplus or deficit will affect future contributions by individual employers, as there is no prescribed basis for allocation. The scheme is therefore accounted for as a defined contribution scheme LONG TERM PLAN

10 Provisions We recognise a provision for future expenditure of uncertain amount or timing when there is a present obligation (either legal or constructive) as a result of a past event, it is probable that expenditures will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses. The most significant provisions relate to landfill post closure costs. We own Oamaru and Palmerston operational landfills, and are also responsible for several closed landfills throughout the district. We have a legal obligation to apply for resource consents when the landfills reach the end of their operating life and are to be closed. These resource consents set out the closure requirements including an obligation for on-going maintenance and monitoring at the landfill site after closure. A provision for post-closure costs is recognised as a liability when the obligation for post-closure arises. The provision is measured on the present value of future cash flows expected, taking into account future events, including new legal requirements and known improvements in technology. The provision includes all costs associated with landfill post closure. The calculations assume no change in the legislative requirements for post-closure treatment. Amounts provided for landfill post-closure are capitalised to the landfill assets where they give rise to future economic benefits. The capitalised landfill asset is depreciated over the life of the landfill based on the anticipated capacity used. Financial instruments We are party to financial instrument arrangements as part of everyday operations. These financial instruments include bank overdraft and draw-down facilities, short-term deposits, investments, debtors and creditors. All financial instruments are recognised in the Balance Sheet, while related income and expenditure is recognised in the surplus or deficit. Equity Equity is the community s interest in us, measured as the difference between total assets and total liabilities. Public equity is disaggregated and classified into a number of reserves to enable clearer identification of the specified uses that we make of its accumulated surpluses. The components of equity are: Ratepayers equity Restricted reserves (Special Funds) Operating reserves Asset revaluation reserves Reserves Reserves are a component of equity generally representing a particular purpose to which various parts of equity have been assigned. Reserves may be legally restricted or created by us LONG TERM PLAN 121

11 Restricted reserves are subject to specific conditions accepted as binding by us and which may not be revised without reference to the Courts or third parties. Transfers from these reserves may be made only for certain specified purposes or when certain specified conditions are met. Operating reserves are established by Council decision, and may be altered without reference to any third parties or the Courts. Transfers to and from these reserves are at our discretion. Asset revaluation reserves represent unrealised gains on assets owned by us. The gains are held in the reserve until the gain is realised and a transfer can be made to operating reserves. Capital management Council s capital is its equity (or ratepayers funds), comprising retained earnings and reserves. Net equity is represented by net assets. The Act requires us to manage our revenues, expenses, assets, liabilities, investments, and general financial dealings prudently and in a manner that promotes the current and future interests of the community. Ratepayers funds are largely managed as a byproduct of managing revenues, expenses, assets, liabilities, investments, and general financial dealings. The objective of managing these items is to achieve intergenerational equity, which is a principle promoted in the Act and applied by us. Intergenerational equity requires today s ratepayers to meet the costs of utilising our assets but does not expect them to meet the full cost of long term assets that will benefit ratepayers in future generations. We have in place asset management plans for major classes of assets detailing renewal and maintenance programmes, to ensure ratepayers in future generations are not required to meet the full costs of deferred renewals and maintenance. The Act requires us to make adequate and effective provision in our Long Term Plan to meet the expenditure needs identified in those plans, and sets out factors that we must consider when determining the most appropriate sources of funding for each activity. The sources and levels of funding are set out in the funding and financial policies in this Long Term Plan. Comparative figures Figures presented for the 2013/14 financial year are sourced directly from the audited annual report for the year ended 30 June 2014, and are subject to minor changes as outlined in the section Changes in Accounting Policy. Figures presented for the 2014/15 financial year are sourced from our audited annual plan for that period. Groups of activities Groups of Activities report the net cost of services for significant Council activities, and represent the costs of providing the service less all revenue that can be allocated to these activities. Cost allocation We derive the net cost of service for each significant activity using a cost allocation system whereby direct costs are charged directly to those activities, while indirect LONG TERM PLAN

12 costs are charged to those activities based on cost drivers and related activity/usage information. Criteria for direct and indirect costs Direct costs are directly attributable to an activity. Indirect costs are costs that cannot be attributed in an economically feasible manner to a specific significant activity. Cost drivers for allocation of indirect costs Internal services not directly charged to activities are allocated as overheads using appropriate cost drivers such as actual usage, staff numbers, and floor area. Critical accounting estimates and assumptions In preparing these prospective financial statements we have made estimates and assumptions concerning the future, which may differ from the subsequent actual results. Infrastructural assets A number of assumptions and estimates are made when performing depreciated replacement cost valuations of infrastructural assets. These include: Assessing the physical deterioration and condition of an asset - for example we may be carrying an asset at an amount that does not reflect its actual condition, especially for those assets that are not visible, such as stormwater, wastewater and water supply pipes that are underground. We minimise this risk by performing a combination of physical inspections and condition modelling assessments of underground assets; Estimating any obsolescence or surplus capacity of an asset; and Estimating the remaining useful lives over which assets will be depreciated. Such estimates can be affected by local conditions such as weather patterns and traffic growth. If useful lives do not reflect the actual consumption of the benefits of the asset, then we could over- or under-state the annual depreciation charge recognised as an expense in arriving at the surplus or deficit. To minimise this risk, infrastructural assets useful lives are determined with reference to the NZ Infrastructural Asset Valuation and Depreciation Guidelines published by the National Asset Management Steering Group, adjusted for local conditions based on past experience. Asset inspections, deterioration and condition modelling are carried out regularly as part of our asset management planning activities to give further assurance over the estimates of useful life. Critical judgements in applying our accounting policies Management has exercised the following critical judgements in applying accounting policies over the ten years of this Long Term Plan. Classification of property Community housing We own and maintain properties for community housing. The receipt of market-based rental is incidental to holding these properties, which are held for service delivery objectives as part of our social housing policy, and are accounted for as property, plant and equipment. Unoccupied land We own unoccupied land. Given the uncertainty over the future intended use of the land, we, in applying our judgement, have not classified the property as investment LONG TERM PLAN 123

13 property. Forestry Reliance has been placed on the advice of external forestry managers in determining the likely timing of harvesting operations related to forestry. The proceeds of forestry harvesting do not have an impact on the determination of rates requirements. Changes in accounting policies These prospective financial statements have been prepared in accordance with the PBE standards, implying compliance with NZ GAAP. We have previously reported in accordance with NZ IFRS (PBE). These are the first financial statements to be prepared using the new accounting standards. No significant changes have arisen as a consequence of the transition to the new standards, except for the following: PBE IPSAS 1: Presentation of Financial Statements and PBE IPSAS 23: Revenue from Non-Exchange Transactions prescribe the requirements for reporting revenue arising from non-exchange transactions separately to revenue from exchange transactions. There was no equivalent reporting standard under NZ IFRS. In applying this new standard, we have been required to consider our policy regarding each form of revenue received, and also to reallocate elements of revenue previously reported as part of Other Gains/Losses. Category 2014 Annual Report $000 Re-stated Income Figures $000 PBE Standard applied Other gains / (losses) 1,920 (929) PBE IPSAS 1.88 Assets vested in Council at N/A 2,834 PBE IPSAS no cost Gain/(loss) on revaluation of forestry assets N/A 15 PBE IPSAS 1: Presentation of Financial Statements also requires Receivables from Non-Exchange Transactions to be stated separately to Receivables from Exchange Transactions. Category 2014 Annual Report $000 Re-stated Income Figures $000 PBE Standard applied Trade and other receivables 4,863 - PBE IPSAS 1.88 Receivables from nonexchange transactions Receivables from exchange transactions N/A 2,322 N/A 2,541 PBE IPSAS 20: Related Party Disclosures requires the disclosure of remuneration, including non-financial benefits, of key management personnel, including councillors. Payment of Fringe Benefit Tax relates directly to non-financial benefits enjoyed by certain councillors and employees, and is more correctly disclosed as part of personnel costs. The remuneration of councillors relates to their services as members of the governing body of Council LONG TERM PLAN

14 Category 2014 Annual Report $000 Re-stated Income Figures $000 PBE Standard applied Personnel costs 8,895 8,930 PBE IPSAS 20: Other expenses 22,265 22,228 Related Party Disclosures Accounting standards and interpretations future changes It should be noted that there is potential for all the PBE Standards to be reviewed and changed during the ten year period covered by this Long Term Plan, and it is likely that some of these future revisions may impact our financial reporting in future periods. The effect of any such changes arising as a result of the adoption of future revisions to the current suite of PBE standards cannot be foreseen and so has not been allowed for LONG TERM PLAN 125

15 NOTES Notes to support the Statement of Comprehensive Income Projected for years ended 30 June Actual Budget LTP LTP LTP LTP LTP LTP LTP LTP LTP LTP $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Note 1: Rates Revenue General Rates 2,170 2,160 1,900 1,939 1,834 1,888 1,958 2,076 2,172 2,293 2,400 2,410 District Services Rates 1,433 1,637 1,301 1,322 1,243 1,265 1,351 1,405 1,461 1,589 1,633 1,684 Uniform Annual General Charge 4,408 4,345 4,649 4,780 4,945 5,031 5,117 5,097 5,185 5,325 5,422 5,498 Ward Rates 6,351 6,334 6,433 6,645 6,850 7,043 7,150 7,320 7,454 7,660 7,848 8,015 Separate Rates 8,820 9,370 9,724 9,868 9,825 10,395 10,314 10,693 10,950 11,062 11,504 11,817 Rates Penalties charged ,744 24,271 24,432 24,990 25,144 26,081 26,362 27,078 27,724 28,447 29,343 29,979 Note 2: Targeted Rates for Water Supply Targeted Rates for water supply 5,168 5,261 5,595 5,669 6,148 6,519 6,634 6,795 7,076 7,170 7,464 7,765 User charges for water supply by meter ,650 5,698 6,035 6,120 6,611 6,994 7,123 7,299 7,595 7,706 8,019 8,340 Note 3: Government Grants and Subsidies New Zealand Transport Agency subsidies 6,084 5,072 6,344 6,664 6,368 5,890 5,776 5,950 6,195 6,313 6,504 7,022 Ministry of Business, Innovation & Employment Department of Conservation Ministry for the Environment Ministry for Youth Development Other Government grants and subsidies ,861 5,212 6,464 6,783 6,487 6,009 5,896 6,071 6,315 6,433 6,625 7,141 Note 4: Other Grants and Subsidies Alps2Ocean Cycletrail construction Omarama Hall upgrade Moeraki community - Haven Street rebuild - Est P T Mulligan (bequest) Cultural Facility upgrade ,000 2, Other Grants & Subsidies ,232 2, LONG TERM PLAN

16 Notes to support the Statement of Comprehensive Income Projected for years ended 30 June Actual Budget LTP LTP LTP LTP LTP LTP LTP LTP LTP LTP $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Note 5: User Charges Property rentals 1,412 1,356 1,429 1,468 1,506 1,547 1,591 1,639 1,690 1,745 1,804 1,869 Landfill and waste disposal 1, Proceeds of forestry logging , Other user charges 2,020 2,085 2,281 2,336 2,355 2,439 2,626 2,621 2,731 2,927 2,953 3,187 4,901 4,770 5,689 4,977 4,488 4,630 5,115 5,056 5,124 5,399 5,508 5,834 Note 6: Finance - Finance Income Interest - Bank ,274 1,353 1,430 Interest - North Otago Irrigation Company Ltd Interest - Waitaki District Health Services Ltd Interest - Other community loans Total Finance Income ,274 1,288 1,308 1,331 1,347 1,417 1,488 1,559 1,638 1,715 - Finance expense Interest on bank borrowings Interest on bank overdraft Use of money interest charges Total Finance Costs Note 7: Personnel Costs Salaries and wages 8,257 8,993 9,539 9,698 9,836 10,039 10,279 10,488 10,737 11,026 11,283 11,583 Defined contribution plan employer contributions Fringe Benefit Tax Redundancy and severance payments Total Staff costs 8,559 9,215 9,800 9,964 10,107 10,315 10,562 10,777 11,033 11,329 11,594 11,903 Elected Members' Remuneration Reimbursing Allowances Fringe Benefit Tax Total Elected Members' Remuneration ,930 9,607 10,192 10,363 10,515 10,731 10,987 11,212 11,479 11,786 12,063 12, LONG TERM PLAN 127

17 Notes to support the Statement of Comprehensive Income Projected for years ended 30 June Actual Budget LTP LTP LTP LTP LTP LTP LTP LTP LTP LTP $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Note 8: Other Operating costs Audit Fees - Annual Report Audit Fees - Long Term Plan Community grants and donations 741 1, Total Bad Debts written off Rate remissions (refer also to Note 1) Renting and Leasing Electricity 1,655 1,592 1,573 1,573 1,690 1,690 1,690 1,906 1,906 1,906 2,188 2,188 Insurance Forestry harvesting costs Other Expenditure 18,337 18,008 19,895 20,597 19,514 20,317 20,880 21,424 21,857 22,883 23,172 24,083 22,230 22,432 24,516 24,637 23,304 24,022 24,784 25,561 25,922 27,007 27,724 28, LONG TERM PLAN

18 Notes to support the Balance Sheet Projected for years ended 30 June Actual Budget LTP LTP LTP LTP LTP LTP LTP LTP LTP LTP $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Note 9: Loans to Other Entities - Non-current portion North Otago Irrigation Company Ltd 12,644-17,000 17,000 17,000 17,000 17, Oamaru Whitestone Civic Trust Waitaki District Health Services Ltd - 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 Other entities Current portion 13, ,430 22,430 22,430 22,430 22,430 5,430 5,430 5,430 5,430 5,430 North Otago Irrigation Company - 12, , Oamaru Whitestone Civic Trust Waitaki District Health Services Ltd Other entities , , ,023 13,217 22,430 22,430 22,430 22,430 22,430 22,430 5,430 5,430 5,430 5,430 The advance to the North Otago Irrigation Company is due for repayment in the 2016 financial year. However, in July 2015 additional funds will be provided, and the loan effectively replaced with a new advance due to be repaid in June Hence the debt is reported as current in both 2015 and Note 10: Provision for Closed Landfills Opening balance Additional provision made Provision used (165) (275) (223) (169) (35) (40) (34) (41) (40) (62) (36) (43) Analysed as - Non-current portion Current portion The provision for closed landfills has been established to recognise Council's obligation to restore land formerly used for landfill operations, and to monitor the sites to ensure that adverse effects are mitigated. The provision at any time represents the net present value of Council's projected costs over the thirty year period commencing at the closure date LONG TERM PLAN 129